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March 18, 2009 The Economic Times

Diacritech buys US-based KPO firm

Knowledge process outsourcing (KPO) company DiacriTech, which has a headcount of 700 and facilities in Chennai, Madurai and Kottayam, recently acquired US-based e-Publishing outsourcing firm LaurelTech Integrated Publishing Solutions for an undisclosed sum.

“The acquisition will help position the company to work in a hybrid onshore/offshore model, capable of delivering design, editorial and project management capabilities in the US,” DiacriTech vice-president Gopinath ARM told ET

Although he refused to comment on the size of the deal, Mr Gopinath conceded the slowdown did help in getting a more favourable takeover price, but added that it had not affected the momentum of the educational KPO segment substantially.

Industry sources estimate DiacriTech’s annual business to be in the Rs 20 crore-Rs 30 crore range. LaurelTech is also said to be of a similar size. The educational KPO segment has had a presence in the country for the last two to three decades. India is a hotbed of educational outsourcing, followed by Philippines, China and some African countries. Globally, the segment is estimated at about $4 billion. Of this, roughly $1.2 billion worth of projects are outsourced to India and the segment has been showing a y-o-y growth rate of 30%.

Apart from education, e-learning, e-book services and STM (science, technology and medicine) are some of the other segments under the KPO industry, which is estimated to be a $20-billion industry in the country.

While the US, UK and Australia are the biggest market for Indian KPO firms, Germany and France are also emerging as big markets. “Command over the English language and our strength in science and mathematics had proved favourable for the industry in India,” Mr Gopinath said.

The company is open to more acquisitions and is scouting for targets in the US and Europe.